UK banks are launching a ‘retry’ system that will give customers a second chance to avoid bounced payments and their associated fees. From 1 September, when a customer’s standing order, direct debit or future-dated payment bounces because of insufficient funds in the account, the payment will be processed again by their bank or building society later the same day.
UK banks have launched a bounced fee system
This means that customers will get until at least 2pm the same day to pay cleared funds into their account, which will allow the ‘retried’ payment to be successfully processed the second time around so that charges are avoided.
The new approach aims to bridge a disconnent between faster payments processing and legacy back office infrastructure. The UK’s Faster Payments Service means that payments to and from bank accounts typically take a couple of seconds to process, whereas banks typically process incoming and outgoing payments early in the morning. This means that when a customer makes a deposit or receives their salary after this process, they can be left with an unpaid item fee.
It is estimated that these penalty fees incurred through the old system cost customers as much as £200 million a year.
Jemma Smith, director of communications and education at the UK Payments Council, said: “The introduction of the retry process helps to give customers more control when it comes to meeting their financial commitments. This new process acts like a safety net for those situations when you might not have enough money in your account, giving you a chance to put things right by paying in cleared funds.”
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